Today it was announced that economist and New York TImes journalist Paul Krugman was awarded the Nobel Prize in Economics. The timing is funny to me as I was in the midst of a commentary on Nobel Laureates in the field of Economics, a post that will take more time.
In any event, learning more about Krugman’s research, I was happily surprised to learn that he is being acknowledged specifically “for his analysis of trade patterns and location of economic activity.” Excerpts from Bloomberg today:
…The Princeton economist’s academic work analyzed how world trade came to be dominated by countries that both import and export similar products — automobiles, for example.
…“This kind of trade enables specialization and large-scale production, which result in lower prices and a greater diversity of commodities,” the Royal Academy said in a statement today.
…While Krugman found broader fame with his New York Times columns attacking Bush, he gained his reputation in economics by arguing countries could gain a competitive advantage through subsidies to key industries. His research helped explain how the development of large-scale production for the world market has attracted more people to cities and led to higher wages. (Bloomberg)
The timing on this award has additional significance as Krugman’s work will be highlighted and rediscovered at our current juncture. With a strong prospect that the GOP will give up the White House in November, a stalling American economy, a continued concern for renewable and strategically sustainable energy, and a view to rebuild our the economic framework around sustainable principles, I see a close future that includes rhetoric and real action to create American goods and services.
The creation of value by the making of things (goods and services) as opposed to financial instruments, requires man/woman hours that cannot be substituted by electrons. Real work, borne by real people is what will drive growth in the years ahead. With a healthy dose of government investment in renewable energy whether direct in dollars or indirect in legislation and tax incentives, or both, America can once again take a leadership role in a key global growth industry, sharpening its competitive advantage before others leap frog ahead. After all, building a economically sustainable energy industry and infrastructure is going to require that existing and new technologies be brought to the masses. Green technologies, and the products and services borne by them will have the unique benefit of creating value for the seller, by virtue of profit margins, and for the buyer who will reduce their capital expense currently burdened by unsustainable energy commodities and the ugly expenses of hedging.
Krugman’s views of subsidizing key industries could help lead us to a new form of sustainable (and greener) prosperity.
Princeton University’s Paul Krugman Wins Nobel Economics Prize
Simon Kennedy, Rich Miller, Bloomberg, October 13, 2008